Magners firm slows UK sales decline

Magners cider maker C&C today predicted earnings growth this year after slowing the slide in sales volumes of its flagship brand in Britain.

The Dublin-based drinks firm, which acquired Tennent's lager in September, said market conditions were still challenging but that continued resilience in off-licence sales and the launch of Magners Pear had helped trading.

Magners sales volumes fell 4.9 per cent in Britain in the year to February, following the 17 per cent drop seen a year earlier as the consumer boom in cider sales slowed. Supported by its "Method in the Magners" marketing campaign, the decline was 2.7 per cent in the first two months of the new financial year.

Falling: The consumer boom in cider sales has slowed down

It warned of year-on-year volatility in this year's figures due to a
10 per cent increase in cider duty in March, a rise absorbed by C&C.

Cider revenues in Britain dropped 9.1 per cent to 149 million euros
(£128.2 million) in the year to February, as a result of tougher
comparisons with a year earlier.

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In pubs and clubs, the Magners brand continued to underperform the
rest of the cider sector, although the launch of a pear version of the
Magners brand and growth in draught volumes improved the trend on a
year earlier.

Operating profits in the UK cider division improved 48.1 per cent to
19.7 million euros (£16.9 million), helped by cost savings and a lower
level of brand investment this year.

Across the group, which also sells Bulmers cider in Ireland,
underlying earnings before exceptional items and acquisitions were down
10.9 per cent to 89.5 million euros (£77 million).

Chief executive John Dunsmore said current trading, including for
Tennent's and its other recent addition of the Gaymers Cider Company,
supported its hopes of a return to earnings growth for the current
financial year.

The group spearheaded a revival in demand for cider across Britain
in recent years, with sales soaring by 264 per cent in 2006 as the
drink's popularity was boosted by a high profile advertising campaign
and hot summer weather.

However, it struggled to cope with the demand and faced higher than
expected costs in ramping up production. It failed to sustain the sales
growth amid poorer weather and increased competition.